Hey - it’s Jason Yeh 🕺🏻

This is my weekly recap of thoughts I’ve had while helping founders solve their fundraising challenges this past week (5.24.22)

If you have any questions, please reply! I try to get to every comment/question I get :)

On to the Fieldnotes for 5.24.22…

Surviving the current mess: perspective and fundraising tips

What I’m seeing in the market and how to handle it…

I’m writing this on May 20, 2022 after a pretty sunny but tiring week in SF.

Why tiring?

3 days ago, Michael Seibel, the CEO of Y Combinator sent a (now leaked) message to YC founders. Multiple founders have forwarded it to me along with the same anxious question – “IS IT GOING TO BE THIS BAD??”

Since this came out, I’ve talked with a handful of VCs and over a dozen founders. I had my own opinions on how things will play out but it was helpful to get other perspectives.

You can trip in the Twitterverse and fall into a dozen different VC predictions on what happens with the market. I’m throwing my own in the ring, but as always, I’ll try to share my take with a more specific tactical lens related to fundraising.

My personal take / prediction:

We’re definitely going through a slowdown (both pricing correction and deal velocity) in the early stage private markets where I spend all my time.

Global wars, inflation, and other macro forces are influencing investor sentiment. More specifically, this has had a huge hit on the collective investor psyche:

Yes, the public markets have been hammered. But why exactly is that impacting early stage venture capital?

Impact of Public Markets on VC

There are multiple reasons public markets impact venture capital. The 3 that most influence fundraising as a founder are:

1. Investor wealth = YOLO – many investors have positions in the public markets to diversify outside of their index around early stage venture. Whether it’s because of direct personal investments or exposure via mutual funds / 401k indexes, the public market has a very palpable effect on an investor’s personal wealth and security. When wealth and security surge, so does an investor’s willingness to throw caution to the wind… or YOLO. I guess the cooler term would be ‘ape’. When investors feel rich, they are more likely to ape into deals and be less price cautious. In a market downturn, wealth and security take a major hit along with the aggressive, uncontrolled investing that tends to benefit founders.

2. The strength of M&A currency – for a venture style outcome to occur via M&A, the acquirer most likely needs to be a large public company. The public markets can be an insight into large acquirers’ appetite to spend. Healthy multiples means a healthy impact on stock price by acquiring a startup’s revenue. Also, acquisitions by public companies are often done using public stock. It is the currency of acquisitions so the value of that currency impacts how aggressive companies will be acquiring companies.

(What should a founder do now? (Click to continue reading...)

Smart Twitter Takes

They have good intentions, but this is what happens. At the end of the day, it’s your story…

The last part is the most important. “If interested, they ask.”

Till next week. Stay adamant and be chased.

Jason

P.S. I feel so seen 🥺

In case you missed it…

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